The pressure for health care providers to reduce operating costs continues to build. So does the pressure on health care executives and managers to find more efficient ways of doing business without sacrificing quality. One area ripe for efficiencies and cost savings is the supply chain. Using technology can trim expenses by as much as half. That’s the takeaway from a recent webinar from McKesson featuring McKesson Senior Product Manager Jayme White.
As the pressure to reduce operating costs builds for health care providers, so does the pressure on health care executives and managers to find more efficient ways of doing business without sacrificing quality. An area ripe for efficiencies and cost savings is the supply chain, where technology can trim expenses by as much as half.
That’s according to McKesson Senior Product Manager Jayme White, who leads the McKesson webinar “Utilizing Technology to Better Manage the Supply Chain.”
White describes the considerable clinical and financial benefits to health care providers from automating their supply chain. Technology solutions range from the most basic bar-coding systems to more advanced systems with perpetual inventory capabilities.
White estimates that at most only 20% of physician practices and other ambulatory care providers have fully automated their supply chain process. Another 60% have partially automated systems, she says, with the final 20% managing supply chain manually via paper, phone and fax.
“For most providers, supply chain is cumbersome at best and complicated at worst,” White says.
Providers that automate their supply chain process enjoy significant improvements in three areas — control, efficiency and services. These improvements all lead to better outcomes for patients and lower operating costs for providers, according to White.
Some examples of improvements are reducing the time it takes to order supplies, ensuring that the right supplies are ordered at the right time and freeing up capital formerly tied up in unused and expired supplies sitting on shelves and packed away in boxes.
“If you have more than 30 days of supplies on hand, that’s too much,” White says. “That’s capital that can be used for other purposes.”
Labor savings mean people can be reallocated to other jobs like patient care, she adds. She estimates that automation can reduce supply chain-related labor costs by 15% to 50%. White points to one analysis that says using technology to order, buy and bill for medical supplies could reduce per-transaction costs by 42%.
White lists 21 features, functions and capabilities that an automated supply chain system should have. The cost of automation runs as low as $100 to $500 per month for a small facility leasing a web-based solution from an outside vendor. Annual fees for larger facilities or systems with larger supply inventories can run $15,000 to $500,000, she says.
Whatever the cost, the return on investment is significant. Health care providers seeking operating efficiencies should examine how they manage their supply chain functions. Automating those tasks can result in better health for patients and better business health for their institutions.